Shifting Winds

For the last decade, markets operated under a very specific regime: cheap money, low inflation, and near-zero interest rates.

That regime ended abruptly.

The post-pandemic inflation shock forced the Federal Reserve into the most aggressive tightening cycle in a generation, and the result was simple: risk-free yields came back. The US Treasury curve re-priced upward, and cash stopped being “dead capital.”

Today, investors can earn meaningful returns simply by holding short-duration government instruments - something that would have sounded unrealistic during the Zero Interest Rate Policy (ZIRP) years.

But here’s the key point: Treasury yields are historically elevated, and this will not last.

Not because markets “want” lower yields, but because the forces that keep yields high are cyclical. Over time, macro systems normalize, policy adjusts, and capital shifts.

If you are building long-term yield strategies - especially for institutional money or stablecoin capital - this is the moment to understand what’s temporary, what’s structural, and what is likely to fade.

Why Treasury Yields Became So Attractive Again

Treasury yields are ultimately the price of money.

When inflation rose sharply, the Fed pushed policy rates up to slow demand and bring inflation back under control. That tightening rippled through every asset class - but it also created an unusual situation: safe yield became competitive again.

For context, the 10-year Treasury yield moved significantly higher compared with the ultra-low levels seen in 2020–2021, returning to levels closer to historical averages and at times pushing toward multi-year highs.

Even now, yields remain well above the “free money” era baseline, which is why Treasuries, and anything benchmarked against them, became central again to portfolio construction.

Why These High Treasury Yields Are Unlikely to Persist

Markets often treat elevated yields as if they are a new permanent normal. That’s a mistake.

High yields can stay high for longer than expected - but they are rarely stable for a full cycle. The forces that pull yields down tend to reassert themselves once inflation is under control and growth slows.

1) The Fed doesn’t cut rates for fun - it cuts when the economy forces it

Rate cuts usually arrive when inflation cools and the labour market softens, or when financial conditions tighten enough that the system needs relief.

Recent commentary and market expectations reflect exactly this: policy is no longer in an “emergency hike mode,” and rate cuts have already become part of the narrative again.

Lower policy rates generally reduce the ceiling for yields across the curve over time.

2) Inflation pressures can fade faster than market psychology

The bond market is extremely sensitive to inflation expectations. When inflation prints come in softer, yields often compress quickly.

This is not a prediction - it’s how the pricing mechanism works. When inflation stops being the dominant risk, capital begins hunting duration again.

3) Term premium is unstable - and it doesn’t stay elevated forever

A big part of longer-dated yields is not just expected short-term rates, but the extra compensation investors demand for holding duration risk - the term premium.

In 2023–2024, the market experienced major swings in term premium dynamics, which materially impacted the level of long-term yields.

Term premium can rise due to supply concerns, uncertainty, or inflation fears - but it can also compress quickly when demand returns or volatility falls.

The Real Risk: Investors Are Building “Yield Strategies” That Only Work in This Regime

The hidden danger of elevated Treasury yields is what they do to behaviour.

When yields are high, investors start treating them as stable and permanent. They begin designing portfolios and return expectations that depend on those yields continuing.

But if yields drift down over the next 12-36 months, a lot of the “safe yield” narrative changes.

And that matters because:

• portfolios that are built for 4–5% cash returns may underperform when cash returns compress
• passive yield strategies lose momentum
• capital reallocates into riskier assets — often at the wrong time
• investors are forced back into the old question: where does durable yield come from?

This is exactly the problem Nomad Fulcrum is addressing in its macro framing: high government yields are attractive, but they are not a permanent foundation.

Why This Matters for Stablecoins (and the Entire On-Chain Economy)

Stablecoins have become one of the most important liquidity instruments in global digital markets.

But stablecoins have a structural issue: stablecoin capital often sits idle.

In practice, it becomes “parked liquidity” - available, but not productively deployed at scale. This creates a massive inefficiency: a large base of capital that could earn yield, but lacks consistent access to institutional-grade return streams.

When Treasury yields are high, the opportunity cost of idle stablecoins becomes obvious.

When Treasury yields fall again, the problem doesn’t disappear - it intensifies, because yield becomes scarcer.

In both scenarios, the solution is the same: on-chain capital needs durable yield infrastructure that does not collapse when the macro regime changes.

The Post-Treasury-Yield Era: “ZIRP-Proof” Yield Becomes the Real Moat

Nomad Fulcrum leans into a strong idea: ZIRP-proof yield infrastructure.

This is not marketing fluff. It’s a macro positioning statement.

It means building yield access that remains relevant in a world where:

• policy rates normalise
• Treasuries stop offering unusually attractive returns
• institutional products become the reference point again
• markets rotate back into risk assets
• passive yields compress, and “real yield” becomes premium

In that environment, the winners are not projects with the best UI or the loudest token narrative.

The winners are systems that can deliver:

• scalable yield access
• regulated execution and settlement
• risk-managed strategy allocation
• institutional distribution pathways

That is how yield survives across cycles - not by depending on one regime.

Key Takeaway: The Window Is Open - But It’s Not Permanent

Historically elevated Treasury yields are a gift for anyone allocating capital today. They provide signal, discipline, and an unusually strong baseline return.

But they are also a warning: this yield environment is temporary.

Rates will not stay “this high forever.” They will eventually compress - whether due to policy shifts, growth slowing, falling inflation, or changes in term premium dynamics.

And when they do, markets will return to the same fundamental question:

Where do you source durable, scalable yield when “risk-free” stops paying?

That question is exactly why yield infrastructure - not yield hype - is becoming the most valuable layer in the next financial cycle.